Question 1

Which of the following type of employee typically does not complete time cards?

Accepted Answer

A)  Salaried employees. 
B)  All employees must complete time cards. 
C)  Hourly employees. 
D)  Time cards are typically completed by salaried employees, but may also be completed by hourly employees.

Question 2

What must auditors do to meet their obligations under professional auditing standards related to the observation of inventory?

Accepted Answer

The answer of What must auditors do to meet their...

Question 3

Any retirement savings deductions and other deductions are found on what form?

Accepted Answer

A)  Rate authorization form. 
B)  Time cards. 
C)  Deduction authorization form. 
D)  Job time ticket.

Question 4

Tests of payroll are usually not extensive because:

Accepted Answer

The answer of Tests of payroll are usually not extensive...

Question 5

Which of the following is not a generally recognized of inventory valuation method?

Accepted Answer

A)  FIFO. 
B)  LOFO. 
C)  LIFO. 
D)  Weighted average.

Question 6

When auditing the inventory and warehousing cycle, the use of analytical procedures is:

Accepted Answer

A)  not important for this cycle. 
B)  more important than for any other cycle. 
C)  as important as their use in any other cycle. 
D)  less important than for any other cycle.

Question 7

What are the auditor's two main objectives in the audit of the ending balance in accumulated depreciation?

Accepted Answer

The answer of What are the auditor's two main objectives...

Question 8

What potential problems may arise when an auditor considers the relationship between payroll andinventory valuation?

Accepted Answer

The answer of What potential problems may arise when an...

Question 9

The physical counting of inventory may be performed at which of the following times?

Accepted Answer

The answer of The physical counting of inventory may be...

Question 10

Which of the following audit objectives is not typically a major objective in the audit of current year fixed asset additions?

Accepted Answer

A)  Completeness. 
B)  Detail tie- in. 
C)  Classification. 
D)  Accuracy.

Question 11

One of the auditor's primary objectives when auditing manufacturing equipment is accuracy.

Accepted Answer

A) True 
 B)False

Question 12

Match each of the descriptions with the following terms
-A document written in exchange for services received from an employee.

Accepted Answer

A)  Personnel records 
B)  Deduction authorization form 
C)  Rate authorization form 
D)  Time card 
E)  Job time ticket
F) Payroll transaction file
G) Payroll check
H) Payroll tax returns
I) Payroll journal
J) Payroll master file

Question 13

Which of the following is not likely to be a test related to the audit of manufacturing equipment?

Accepted Answer

A)  Verify depreciation expense. 
B)  Verify current year additions. 
C)  Observe current year disposals. 
D)  Perform analytical procedures.

Question 14

Discuss the key internal controls over existing fixed assets that affect the auditor's extent of testing of fixed assets acquired in prior years.

Accepted Answer

The answer of Discuss the key internal controls over existing...

Question 15

Match each of the descriptions with the following terms
-A document indicating the time the hourly employee stated and stopped working.

Accepted Answer

A)  Personnel records 
B)  Deduction authorization form 
C)  Rate authorization form 
D)  Time card 
E)  Job time ticket
F) Payroll transaction file
G) Payroll check
H) Payroll tax returns
I) Payroll journal
J) Payroll master file

Question 16

Why does the auditor not normally test the accuracy or classification of fixed assets recorded in prior periods?

Accepted Answer

The answer of Why does the auditor not normally test...

Question 17

Which of the following expenses is not typically evaluated as part of the audit of the acquisition and payment cycle?

Accepted Answer

A)  Depreciation expense. 
B)  Property tax expense. 
C)  Insurance expense. 
D)  Bad debts expense.

Question 18

Which of the following would be an appropriate initiation of a purchase requisition?

Accepted Answer

The answer of Which of the following would be an...

Question 19

Which of the following is not an advantage of using an imprest payroll account?

Accepted Answer

A)  It allows the delegation of payroll check- signing duties. 
B)  It limits the company's exposure to payroll fraud. 
C)  Companies have fewer banking transactions. 
D)  It facilitates cash management.

Question 20

Expense accounts analysis is closely related to tests of controls and substantive tests of transactions. The major difference is:

Accepted Answer

A)  that one emphasizes transactions and the other emphasizes amounts. 
B)  the degree of concentration on an individual account. 
C)  the difference in the types of underlying documentation which is examined. 
D)  the use or nonuse of cutoff tests.

Exam 7: Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts, Audit of the Payroll and Personnel Cycle, Audit of the Inventory and Warehousing Cycle